Correlation Between Truist Financial and Triumph Financial

Can any of the company-specific risk be diversified away by investing in both Truist Financial and Triumph Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Truist Financial and Triumph Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Truist Financial and Triumph Financial, you can compare the effects of market volatilities on Truist Financial and Triumph Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Truist Financial with a short position of Triumph Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Triumph Financial.

Diversification Opportunities for Truist Financial and Triumph Financial

-0.39

Correlation Coefficient

Truist Financial  Triumph Financial

Very good diversification

The 3 months correlation between Truist and Triumph is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Triumph Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Financial and Truist Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Truist Financial are associated (or correlated) with Triumph Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Financial has no effect on the direction of Truist Financial i.e., Truist Financial and Triumph Financial go up and down completely randomly.

Pair Corralation between Truist Financial and Triumph Financial

Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Triumph Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 1.36 times less risky than Triumph Financial. The preferred stock trades about -0.25 of its potential returns per unit of risk. The Triumph Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,326  in Triumph Financial on September 15, 2024 and sell it today you would earn a total of  39.00  from holding Triumph Financial or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Truist Financial  vs.  Triumph Financial

Truist Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Triumph Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Triumph Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Truist Financial and Triumph Financial

The main advantage of trading using opposite Truist Financial and Triumph Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Triumph Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Triumph Financial will offset losses from the drop in Triumph Financial's long position.

The idea behind Truist Financial and Triumph Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.